Opportunities and Risks with the Cloud

Retail processes are optimized by cloud computing

01/04/2015

Cloud computing can – if used properly – also have a huge potential for retailers to create flexible systems by making information, important applications and even entire business processes available and usable in real-time via the Internet. Yet most retailers are still skeptical and are above all afraid of data security issues.
Photo: © Epson Deutschland GmbH

The use of cloud solutions makes it possible to not just use raw data, but complete software applications without them having to be locally installed; © Epson Deutschland GmbH

In the private domain, the use of cloud services is already comparatively widespread. Many utilize the often affordable storage space in the Cloud. However, when it comes to using it in the professional environment, many potential users are still hesitant.

German retailers are especially uncertain and pass up opportunities

According to a study commissioned by Epson last year, German retailers are considerably more skeptical as far as the introduction of cloud-based services is concerned compared to their European counterparts. Roughly 90 percent of the 400 surveyed retailers in Germany are particularly concerned about data security of cloud services. About 20 percent of respondents even indicated that they are also going to refrain from introducing such services in the long term. Many of them are missing a solution to implement software on demand systems. Yet it is exactly those systems that offer the chance to increase efficiency and lower costs.

In contrast, only 28 percent of interviewed retailers believed that the business opportunities the Cloud offers outweigh the potential risks. That’s a mistake, believes Schahin Elahinija, Director of Marketing at Epson Germany: “Commercial enterprises that dismiss cloud-based services pass up on great opportunities for their future business because the consumer buying behavior changes thanks to modern technologies and their demands on the company increases. Similar investigations in other European countries show that approximately half of all retailers already had great experiences with cloud services.“

Data needs to become useful

Each retailer today needs to collect immense amounts of data, then process, evaluate and store it. Without a corresponding IT infrastructure, these days this is no longer possible. This includes both the back office area with the typical computer hardware as well as the hardware in stores – for instance point of sale systems, information kiosks or mobile devices used by employees.

On the other hand is software, for instance the inventory management system. That said, a retailer might collect tons of data, but if this data is not cross-linked and stored separately, a lot of potential for analysis and optimization of all business processes is being wasted.

Cloud computing applications for retail

The biggest advantage of cloud computing for retailers is precisely that, the availability of important data that can be accessed from anywhere via the Cloud. At the same time, the use of cloud solutions also makes it possible to not just use raw data, but complete software applications without them having to be locally installed. The place where the software application runs is therefore detached from the place where a specific functionality is required.

This also means that individual mistakes can be corrected from a central location without requiring on-site service. In addition, cloud computing offers retailers the option to utilize customized IT solutions on the one hand while they can simultaneously fall back on standard solutions from the Cloud for less specific processes. The availability of scalable cloud solutions enables smaller retailers in particular to access services they were previously not able to afford.

“Today highly developed POS solutions offer smaller retailers opportunities that were previously only available for large companies with comprehensive IT infrastructures,“ explains Elahinija. “Solutions are platform-independent and therefore compatible with all popular web browsers.“

Cloud solutions increase flexibility

Those companies that have chosen to introduce such solutions so far mention the flexibility of the Cloud as its major advantage. Since cloud computing services are usually only charged based on usage, additional resources can be added or cut down again at any time.

For online retailers as well as brick-and-mortar businesses, the –particularly seasonal- allocation of computing capacity is usually important. This way, they can simply add computing and memory capacity for instance during the high frequency Christmas season. If these capacities are no longer needed, the unused storage can be cancelled again. This is an advantage compared to a traditional data processing center, because here it usually is not as easy to install a new server for instance.

Central management for IT applications also offers advantages particularly for brick-and-mortar retailers, since the store and its employees are relieved of most IT specific questions. These questions are being resolved where the respective specialists are located. This reduces complexity at the store, which is also reflected as a cost reduction in service and maintenance.

The crux of data security

One of the biggest barriers to cloud computing use is the worry about security of business sensitive data. Cloud services of course are also potential targets for data theft. Yet to rely exclusively on physical data storage is something no company can get away with nowadays based on the already mentioned advantages of Cloud use. This is why each access provider and each user is responsible for investing in efficient data protection.

Another issue is system failure. Modern cloud solutions however are well prepared in most cases. All processes take place directly in the Cloud on central servers as long as there is an online connection. The end device then “only“ serves to enter data and display it. Should the system be offline data can still be locally stored for the short term and is then automatically transferred to the systems in the Cloud after network connection has been restored.

The entire store software – ranging from POS to back office all the way to system management solutions as well as sales and marketing – can be provided in the Cloud with the right cloud solution, which makes the retailer more flexible and increases process efficiency.

Author: Daniel Stöter; EuroShop
First publication at iXtenso.com